Where share premium and other reserves go in micro-entity accounts

This guide is for companies limited by shares. A company limited by guarantee has no share capital or share premium.

What to enter where

Use the closing equity balances from your accounts. Enter comparative balances in the prior-year column where requested.

Prepared nominal issued capital

Financial data → Balance sheet → Share capital

Enter nominal share capital only, whether paid or unpaid. If it remains unpaid, see called up share capital not paid.

Prepared remaining equity

Retained earnings

Combine accumulated profits or losses, share premium and other reserves for this summarised entry. The label does not establish that all reserves can be distributed.

Worked example: a company issued 100 £1 shares for £30,000, so it has £100 of share capital and £29,900 of share premium, and it has £15,000 of accumulated profit. Enter Share capital £100 and Retained earnings £44,900. The filed balance sheet shows Capital and reserves £45,000, exactly as it should.

Why there is only one equity line

The balance sheet format for micro-entity accounts is fixed by company law, and FRS 105 follows it. On the funding side it prescribes a single item called Capital and reserves. There is no share capital line, no share premium line and no retained profit line in the filed accounts. Everything the shareholders have put in or left in the company is added together and filed as one number.

Our wizard asks for two figures, Share capital and Retained earnings, because the balance check (net assets must equal capital and reserves) is much easier to get right when the share capital part is pinned to a number you can verify at Companies House. But only the total of the two is filed.

Why this is compliant

It can feel wrong to put share premium in a field called Retained earnings, so it is worth being precise about what the rules actually require.

• The filed accounts cannot be affected. The micro-entity format aggregates all of equity into one Capital and reserves total. That total is the same whichever of our fields the premium passes through, so the accounts filed with HMRC and Companies House are identical either way. Aggregating is not a shortcut, it is the prescribed presentation, and micro-entity accounts prepared in this format are treated by the Companies Act as giving a true and fair view.
• Your own books still keep the distinction. Company law requires a company that issues shares above nominal value to record the excess in a share premium account in its own accounting records. That duty applies to your bookkeeping, not to the micro-entity filing, and entering a combined figure here does not change it.

The dividend catch

This is the one place the combined figure can mislead you. Retained profits can be paid out as dividends. Share premium cannot, and neither can a capital redemption reserve. If your Retained earnings figure includes these reserves, the amount available for dividends is smaller than the number on screen. In the worked example above, the company shows £44,900 but only £15,000 of it is distributable. Paying dividends out of share premium is an unlawful distribution, and directors can be personally liable to repay it, so always check what the figure is made of before declaring a dividend.

Your previous accounts

If we import last year’s figures from Companies House and your previous accounts recorded share premium separately, we fold it into the Retained earnings comparative automatically, so the prior-year column balances and matches the guidance above.

When you need more detail

Some companies want or need the reserves shown separately on the face of the balance sheet, for example to satisfy a lender. That is a feature of the larger small-companies regime (FRS 102 Section 1A), which itemises equity. We file micro-entity accounts only, so if your company needs itemised reserves, or exceeds the micro-entity thresholds, you will need an accountant or software that prepares FRS 102 accounts. See which company types we support.

This article is general guidance, not tax or legal advice. If you are unsure whether a payment to shareholders is a lawful dividend, speak to an accountant.